The Clean-Election State

While officials in other states struggled to balance their budgets in 2011, Governor Dannel Malloy and the Connecticut General Assembly closed a deficit of historic proportions one month early, agreeing on a mix of tax hikes and union concessions. That topped a list of unmatched legislative accomplishments: Connecticut passed in-state tuition for illegal immigrants, a transgender-rights bill, a major genetic research initiative, a bipartisan job-growth package, and the nation’s first paid sick-leave mandate.

In a year of reactionary politics and partisan gridlock nationwide, what made Connecticut so different? One-party control over both the governor’s office and the legislature for the first time in 21 years played a role. But the secret behind the Democrats’ success was sweeping campaign-finance reform enacted six years earlier. Reeling from the embarrassment of a corruption scandal that landed a governor in federal prison, Connecticut legislators grabbed the national spotlight in 2005 by stopping the flow of millions of special-interest dollars, banning lobbyist contributions, and instituting a public-financing system that record-setting numbers of candidates have embraced.

The impact of the reforms was evident almost immediately after their implementation in the 2008 elections. For years, powerful lobbyists for beer and soda distributors had arranged for their clients to keep the nickel deposits that consumers effectively waive by not returning bottles and cans to stores—adding up to about $24 million a year. Environmental advocates had long argued the money should support state conservation programs. A proposal to do that was defeated just weeks before the November 2008 election. But less than three months later, after the swearing-in of Connecticut’s first legislature elected mostly with public funding, lawmakers grabbed those unclaimed nickels. “There wasn’t even much discussion, it passed so easily,” says Matt Lesser, a house freshman who’d run with public financing. “It seemed like a done deal.”

Denise W. Merrill, a longtime legislator who’s now secretary of the state, saw a dramatic change among lawmakers. Suddenly, she says, “these guys didn’t even know they were supposed to check with the lobbyists.”

As the lobbyists’ clout diminished, grassroots mobilizing began to pay off. Connecticut’s small Working Families Party pushed for years to make employers give workers paid sick leave; last June, the measure narrowly passed. Edward Meyer, a state senator who was skeptical about the sick-leave mandate, concedes that a blitz of calls, letters, and e-mails from constituents convinced him to co-sponsor the measure. “We don’t get 2,000 messages from constituents on many issues,” he says.

“Campaign-finance reform improved the situation for organizations that know how to research the issues and excel at grassroots organizing,” says Jon Green, director of the Working Families Party. “That kind of constituent contact has started to outweigh the pressure of lobbyists. You still have to go out there and do the work, but public opinion is starting to matter more.”

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Political corruption was once a venerable Connecticut tradition. For years, campaign-finance reform had been discussed, but the debate intensified in June 2004 when three-term Governor John Rowland resigned amid an impeachment inquiry. A legislative panel concluded that Rowland, a Republican, had accepted thousands of dollars in free gifts—flights, vacations, improvements to a lakeside cottage—from state contractors, many of whom had contributed to his campaigns.

Democrats, who had dominated the state legislature since the mid-1980s, had tapped deeply into special-interest dollars as well, maximizing a huge loophole in campaign-finance regulations.

While direct business contributions to candidates were banned, companies could skirt the ban by purchasing advertisements in program books for political events. Businesses technically couldn’t buy more than $250 worth of ads from any one candidate or political action committee (PAC) in a given year, but that meant nothing in practice. There was no limit on the number of PACs each lawmaker could control, nor on the amount of funds they could transfer from the PACs into their campaigns. So if lobbyists and their clients maxed out on their ability to give to one committee, there was a simple solution: Form more.

Fundraising events proliferated. David McQuade, a veteran lobbyist with Murtha Cullina Government Affairs Group in Hartford, says fundraiser invitations for his firm alone averaged one per week and were tracked on a spreadsheet. “Things were getting out of hand,” he says. “I still run at the sight of a canapé or a pig in a blanket.”

The festivities became increasingly businesslike. Upon arriving at legislators’ events, lobbyists recall being presented with lists of their own clients—a seemingly unnecessary exercise that sent a very clear message. “I assumed what they were saying was simple: ‘We expect all of your clients to contribute,’” says Richard Balducci, a former house speaker turned lobbyist.

By early 2005, Rowland had begun serving a ten-month prison term while his lieutenant governor and successor, Jodi Rell, was pledging to restore honesty and integrity to Connecticut politics. “People wanted a new, fresh beginning,” she says. “I needed and I very much wanted to deliver that.”

Meanwhile, Democrats were taking aim at a governor’s office they had been shut out of since 1990, due in no small part to Rowland’s fundraising hold over contractors and lobbyists. But given the public outcry over the scandal, they too would have to embrace campaign-finance reform. “There was the feeling that legislators would never vote for anything that would limit their own considerable fundraising potential,” says media consultant Jonathan Pelto, who managed the last successful Democratic gubernatorial campaign under the old finance system in 1986.

Five years earlier, Democratic legislators had tried to establish public financing—but only for statewide races, not their own. Now they were proposing a similar plan, which put Rell on the spot as she sought a full term as governor in 2006. Facing the prospect of having to veto public financing for statewide campaigns and risk her public standing, Rell issued a preemptive strike that stunned public officials and reform advocates alike.

No fan of public financing, Rell agreed to accept it, provided that legislators would embrace reforms aimed at them: eliminating ad books, limiting most legislators to one PAC, and banning lobbyists’ and contractors’ contributions. “The look on people’s faces was, ‘What did she say?’” Rell says, recalling the meeting where she explained her offer to Democratic legislative leaders. “I went public with it so they couldn’t back out.”

Meanwhile, one of the house’s leading Democrats aggressively pushed reform. “You had so-called liberals who said they were in favor of reform, if it didn’t affect their pile of money,” says Christopher Caruso, who co-chaired the committee with jurisdiction over election matters. He didn’t hesitate to call them out in public, labeling balking lawmakers “hypocrites.”

“The dynamic of Governor Rell and the Democrats trying to out-reform each other was crucial,” says Karen Hobert Flynn, vice president of state operations for Common Cause. “They would keep egging each other on with public statements, quite confident that the other would not call their bluff.”

But Democratic lawmakers responded to Rell’s dare. They neutralized the fundraising rules that had brought them success, agreeing to ban lobbyist and state-contractor contributions along with ad-book sales. Candidates seeking public dollars would first have to raise a minimum level of funds, all in small amounts, from individual donors. A state senate candidate, for example, could receive $85,000 in state funds for the general election after first raising $15,000 from private donors—none of whom could contribute more than $100.

The level of state funding is where Connecticut has distinguished itself from other states that offer public financing. Its grants for legislative candidates are up to six times larger than those provided by Maine and nearly 20 times greater than those offered by Arizona. Unlike those states, whose initial attempts at public financing drew between 25 percent and 35 percent participation rates by legislative candidates, nearly 75 percent of the candidates participated in Connecticut in both 2008 and 2010. One of the consequences of the law: It increased competition for legislative seats. In both 2000 and 2004, at least one of the major parties failed to field a candidate in nearly 40 percent of Connecticut’s legislative races. By 2010, that percentage had fallen to 29.

“The state has made enormous progress, transforming from ‘Corrupticut,’ an example of rampant wrongdoing after years of scandal, into a model for campaign financing and the future of democracy,” says Beth Rotman, who directed Connecticut’s Clean Election Program from its inception through January 2011.

“There’s always been the idea that legislatures will never give up special-interest money,” says Adam Skaggs, senior counsel for the Democracy Program at the Brennan Center for Justice. “Connecticut’s experience kind of shows the lie in that suggestion.”

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The public-financing System faced its greatest crisis in 2010. Dannel Malloy, the Democratic candidate for governor, had survived a primary contest with one Greenwich millionaire only to find himself matched in the general election against another, Republican Tom Foley. A former U.S. ambassador to Ireland, Foley loaned his campaign more than $10 million. Because of that level of spending, Malloy, already armed with a $3 million public grant for the general election, qualified under state law for an additional $3 million. But in July 2010, the U.S. Court of Appeals’ Second Circuit ruled that the state could not give supplemental public grants triggered by a privately financed opponent’s spending. (One year later, the U.S. Supreme Court would issue a similar ruling in an Arizona case.)

Despite bitter Republican opposition, including a veto by Governor Rell, the Democratic-controlled legislature responded by changing the law. The $3 million base grant for publicly funded gubernatorial candidates was doubled, and Malloy—using the $6 million in public funds he’d originally anticipated—eked out the narrowest of wins over Foley, by 0.6 percent or just over 6,400 votes.

Republicans cried foul. “This was a party that was out of the governor’s office for 20 years, and they wanted it desperately,” says Larry Cafero, the top-ranking Republican in the house. During a floor debate, Cafero sarcastically called the bill “An Act Concerning Dan Malloy.”

“Most reasonable people would say it changed the outcome,” Foley says. “It was a manipulation of the fair-election system in Connecticut.”

Democrats and reform advocates say the change was the only way to preserve the legislature’s intent from 2005. “It was about using public finance to provide a basic level of fairness,” says Don Williams, the Senate’s president pro tempore. “Otherwise, multimillionaires can simply crush their opponents.”

Legislators also had to revise another provision struck down by the appeals court: the ban on lobbyist contributions. They responded by enacting a $100 limit on lobbyist contributions—a measure that held up in court last June, when the Connecticut system cleared its toughest legal hurdle. The Green Party, which had failed to convince the appeals court that additional burdens on minor-party candidates seeking public funds were unconstitutional, petitioned the U.S. Supreme Court to hear its case. If the Court had done so, it could have also overturned the new limit on lobbyists’ contributions and, perhaps, invalidated the new law with higher public funding for gubernatorial candidates. The Court declined to review the case, giving Connecticut’s system its implicit approval.

The biggest concern about the future of Connecticut’s public-financing system now revolves around funding, not courtrooms.

State officials have taken nearly $60 million from the Citizens’ Election Fund to help fill budget gaps in the last three years. The fund paid out $12 million in the 2008 legislative elections and another $30 million in 2010, which also featured the governor’s race and five statewide elections—leaving just over $8 million remaining. This year state officials reduced the fund’s primary source of revenue—proceeds from the annual sale of abandoned properties—by 43 percent. Clean-election advocates question whether the program will have sufficient resources for the 2014 gubernatorial election. They also worry about enforcement; last spring, Malloy and lawmakers cut one-third of the staffing for Connecticut’s elections watchdog agency.

“I know these are difficult times, but you can’t put a price on clean government,” says Hobert Flynn of Common Cause. Connecticut will be hard-pressed to maintain its program if clean elections fall prey to further budget cuts. “What’s really set Connecticut apart so far is leadership that has been willing to make the hard choices needed to preserve clean elections,” says Hobert Flynn. “If you lose that, you begin the slippery slide back to ‘Corrupticut.’”